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Chapter 2

LAW 122 Chapter Notes - Chapter 2: Professional Liability Insurance, Paralegal, Law Society

Law and Business
Course Code
LAW 122
Stan Benda

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LAW 122 - Chapter 2
Litigation is the system of resolving disputes in court. As successful
business people realize, litigation is often a poor way to settle disputes.
Amongst other things, it is usually expensive, often unpredictable, and
frequently fatal to business relationships.
The Litigation Process
As a rule, however, it is a good idea to hire an expert to help out with more
serious matters.
Who Can Sue and Be Sued?
In discussing who can sue and be sued, it is helpful to draw a distinction
between people and organizations. As a rule, all adults are free to use the
Canadian courts, whether or not they are Canadian citizens.
The situation is somewhat more complicated with organizations. As a
matter of law, a corporation is a type of person. A company may therefore
sue or be sued. In contrast, unincorporated organizations, such as clubs and
church groups, are not classified as leal persons. As a result, they normally
cannot sue or be sued. Instead, it is necessary to sue the individual members
of those organizations.
Although trade unions are unincorporated organizations, they can sue and
be sued directly. Special rules may also apply when the government is sued.
Because of traditional rule that said that “the Kind can do no wrong,” the
Crown could not be sued without its consent. The traditional rule has now
been changed by legislation. The statutes are, however, complicated and
they often introduce unusual restrictions.
Class Actions
Sometimes it makes little sense for people to individually sue, even if they
have clearly suffered some sort of legal wrong. If so, there is a danger that
the wrongdoer may profit from its own misconduct. (Think about the
McDonald coffee example; lady with third degree burns + other people)
A class action allows a single person, or a small group or people, to sue on
behalf of a larger group of claimants. Class actions are becoming increasingly
common in Canada. The primary attraction is obvious: they allow small
individuals to take on large organizations. While it is difficult to find a lawyer
to fight a large corporation for $75, it is much easier to find a law firm willing
to take on a case that may be worth $150 million. The threat of a class action
may also prevent a wrong from occurring in the first place. A company may
not worry about thousands of claims worth a few dollars each, but it will
worry about a single claim worth $150 million. Finally, class actions may also
save society money. If there are thousands of claims, and each one is almost
identical, it is cheaper to deal with them all at once.

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Seven provinces have legislation dealing with class actions. Although the
details vary from place to place, the basic ideas are the same.
Common Issues: There must be common issues amongst the various
members of the class. For instance, they may all be women who received
defective breast implants from the same manufacturer; it is not necessary,
however, for every claim to be identical. Even if the court allows a class
action to occur, it may set up a process to deal with the special
circumstances that affect some claimants.
Representative Plaintiff: The plaintiff must qualify as a representative
plaintiff. He or she must demonstrate a workable plan for fairly representing
the interests of the class members. That will not be true, for instance, if the
plaintiff wants the court to reply on a rule that will help some claimants,
while hurting others.
Notifications: A representative plaintiff must also have a workable plan for
notifying potential class members. It is not unusual, for instance, to see class
action notices in newspapers or magazines. In most cases, a class action
automatically includes every claimant who has not expressly opted out
within a certain length of time and every member of that class will be bound
by the decision that the court gives at the end of the trail. People have not
opted out cannot bring separate actions on their own.
Preferable Procedure: The court must be convinced that a class action is
the preferable procedure for dealing with the claims. It will, for instance,
consider whether a class action will become too complicated, and whether
there are enough similarities between the class members.
Certification: Assuming that the previous requirements are met, the action
will be certified. Certification represents the court’s decision to allow the
various claims to be joined together and to proceed as a class action. It is the
most important step in the whole process. It demonstrates that the court
believes that there is a serious and genuine claim to be considered.
Legal Representation
You have the right to represent yourself. You can go into court and argue
your case before a judge, even if you are not a lawyer. A great deal of truth
in the old saying: if you represent yourself, you have “a fool for a lawyer and
a fool for a client.” Litigation is often very complicated. While it is expensive
to hire a lawyer, it may be far more expensive in the long run to lose a
lawsuit because of your own lack of experience.
There are advantages to hiring a lawyer; hiring a lawyer obviously does not
guarantee success, but it does provide you with competent help and it may
increase you likelihood of success.
Each province and territory has legislation to deal with the legal profession.
That legislation restricts the practice of law to people who have met certain

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requirements. A person cannot act as a lawyer until he or she has graduated
from law school, completed an apprentice period known as a period of
articles, and passed the bar by successfully writing a number of
The legislation also establishes a body, usually called the Law Society, to
regulate the profession. The Law Society imposes codes of conduct and
punishes members who act improperly. For instance, a lawyer who misleads
a client may be fined, suspended, or disbarred.
Law societies also require every lawyer to hold professional liability
insurance. If your lawyer acts carelessly, and you suffer a loss as a result,
you may sue for professional negligence. The lawyer, however, may not have
enough to pay for that loss. Professional liability insurance allows you to
receive compensation from the lawyer’s insurance company. Law societies
also create assurance funds, which provide compensation to people who
have been hurt by dishonest lawyers.
Conversations with your lawyer are generally confidential and privileged.
That means that your lawyer cannot share your information with anyone
without your consent and that your discussions cannot be used against you
in the court.
A paralegal is a person who is not a lawyer, but who provides legal advice
and services. Paralegals are an important part of the Canadian legal system.
It is occasionally difficult to find a lawyer to work in a certain are or at an
affordable price. Paralegals are particularly common in small claims courts
and landlord and tenant tribunals.
Anyone wishing to provide legal services must go through the steps of
becoming a lawyer and being admitted to the bar. In some circumstances, a
paralegal who operates outside of that system may be prosecuted for
practicing law without a license.
Furthermore, in contrast to lawyers, paralegals traditionally (i) have not
received formal training, (ii) have not been regulated by governing body, (iii)
have not been governed by a detailed code of conduct, and (iv) have not
been required to carry liability insurance.
Licensed paralegals in Ontario may appear in administrative tribunals, the
Small Claims Court, the Ontario Court of Justice under the Provincial Offenses
Act, and some criminal cases where the maximum penalty is less the 6
months in jail and provide advice in those cases.
They can’t deal with other cases or perform services such as drafting wills
or handling real estate transactions or estates, that are only for lawyers and
they can’t work on a contingency fee basis.
Pleadings are the documents that are used to identify the issues and
clarify the nature of a dispute. Some are prepared by the plaintiff, while
others come from the defendant. The plaintiff is the person who is making
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